Selling shares in a Kosovo SH.P.K.

Partners leave, investors join, founders sell. In an SH.P.K., ownership is divided into shares (percentages), and these can be sold or transferred. The process is simple on paper, but mistakes here cost more than almost anywhere else.

1. Start with the statute#

Before talking price, read the statute and, if there is one, the shareholders' agreement. They usually cover:

• pre-emption rights: existing partners get first refusal before an outsider, on the same terms;
• consent: a sale to outsiders may need the other partners' approval;
• valuation: how the price is set if there's a dispute;
• tag-along and drag-along: if a major partner sells, whether the others can (or must) sell on the same terms.

If the statute says nothing, the statutory rules apply. Why a good statute matters is covered in How to open an SH.P.K..

2. Check the company if you're buying#

When you buy shares, you buy a company with all its liabilities. Before agreeing:

• check the status, owners and authorised persons on Kerko or at ARBK;
• ask for financial statements and a tax clearance certificate from ATK;
• ask about loans, guarantees, lawsuits and key contracts;
• check licences, if the activity needs them.

The basic checklist is in How to check a business.

3. The transfer agreement#

The share sale agreement should include at least:

• the parties and the company;
• the percentage being sold;
• the price and payment terms;
• the seller's representations about the company (debts, disputes, taxes);
• what happens if a representation turns out to be false;
• the date the buyer becomes an owner.

Signatures often need to be certified by a notary. Ask ARBK which form it accepts.

4. The partners' decision#

Depending on the statute, you may need a partners' decision approving the transfer, confirming the waiver of pre-emption or amending the statute (e.g. the list of owners).

5. Registering with ARBK#

The change of owners and shareholdings is registered with ARBK. Until then, as far as banks, partners and the public are concerned, the old owners still own the company. The process is in Changing business details at ARBK.

After registration:

• tell the bank about the new beneficial owners;
• if the director also changes, update the authorised persons. See Authorised persons.

6. Tax#

If you sell shares for more than they cost you, the gain can be taxed as a capital gain. The rules depend on whether the seller is an individual or a company. Work out the tax before you accept a price, not after.

7. When a partner wants out and there's no buyer#

If a partner wants to leave and nobody buys their shares, options can include: the company buying back the shares (where the law allows), reducing capital or at worst closing down. See Closing a business in Kosovo. That's why exit rules should be written down at the founding stage.